CISG: Why Is It Important To Determine When An Offer Takes Effectiveness?

It is important to determine when an offer becomes effective, particularly with regards to the three legal acts which are likely to be observed before or after an offer becomes effective: acceptance (or rejection), revocation and withdrawal of an offer.

It is important to determine when an offer
becomes effective, particularly with regards to the three legal acts which are
likely to be observed before or after an offer becomes effective: acceptance (or
rejection), revocation and withdrawal of an offer. The consequences of an offer
becoming effective shall be evaluated below in relation to these there legal
acts.

Article 15(1) of the United Nations Convention
on Contracts for the International Sale of Goods (the “CISG” or the
“Convention”) provides that “An offer
becomes effective when it reaches the offeree.” Although the provision does
not hold a mandatory nature[1], it
foresees that an offer gains effectiveness only when it reaches the addressee,
which, when read in reverse, results in the ineffectiveness of an offer that
has not reached the addressee. As a result, such an ineffective offer is
incapable of being reciprocated with an acceptance, even if the addressee got
to acquire information concerning the content of the offer through different
channels.[2]

Plausibly, an addressee cannot accept an offer
that has not yet become effective. For example, the offeror sends a letter by
post whereby it offers the addressee to sell certain amount of goods at a
certain price. The addressee learns about the content of this letter by another
person. So before the letter is delivered to its place of business, the
addressee sends an e-mail to the offeror to inform him that it accepts the
offer. However, the letter has not “reached” the addressee at that moment yet
in the sense of Article 24 of the Convention, hence; the said offer has not yet
become effective pursuant to Article 15. Therefore, the e-mail sent by the
addressee cannot constitute an acceptance given that a legally effective offer,
which is capable of being reciprocated with an acceptance, has not come into
existence yet in the first place.

Article 15(2)[3] of the
Convention provides that an offer, even if it is irrevocable, may be withdrawn
if the withdrawal reaches the offeree before or at the same time as the offer.
Again, the Article takes reference the “reaching” point of an indication of
intention; therefore subjecting itself to the principles set forth under
Article 24. More importantly, the Article explicitly sets forth that the time
when the offer becomes effective is the fundamental dynamic in determining
whether the right to withdrawal is properly invoked.

Under Turkish law, too, an offer may always be
withdrawn provided that the withdrawal reaches the offeree before or at the
same time as the offer. However, Turkish law introduces an additional situation
where an offer may be withdrawn even if the withdrawal reaches the offeree
after the offer does and that is when the offeree has not yet become aware of
such offer. Hence, the offeror may withdraw its offer, despite the fact that
its withdrawal reaches the offeree after its offer does, as long as it can
prove that the offeree has not yet become aware of the offer.

Significance in relation to revocability

The time when an
offer takes effectiveness has also significance over the issue of “revocation”
of an offer. A withdrawal that reaches the offeree after the offer may be
deemed as a “revocation”[4]. Such that, in cases where the offeror fails
to act on time to invoke its right to withdraw an offer; there still exists a
possibility to “revoke” such offer provided that the conditions set forth under
Article 16 are met.